On Monday the 30th of March, Australian Treasurer Josh Frydenberg announced temporary measures requiring foreign investments of any size to be approved by an investment review board. These measures are an attempt to halt businesses being acquired in a predatory fashion during rough economic conditions.
Australian companies are reportedly already feeling the squeeze in what is likely the first recession Australia has faced in 30 years, issuing shares and tapping credit lines in order to raise capital and stay afloat. Foreign investors are attempting to leverage this chaos by acquiring businesses whilst they are undervalued, which has led to the Australian government putting these restrictions in place in an effort to bolster confidence in the business sector.
Frydenberg further stated that the review board would place restrictions on agreements where appropriate to reduce the level of possible exploitation from overseas investors, and that each investment would be reviewed on a case-by-case basis.
The government has indicated that it will prioritise applications that favour Australian jobs and businesses, and will take a dim view of corporations re-shuffling structure for tax-offset purposes.
The team at Tower Technology strongly feel this will not be the last protective measure we will see from the Australian government, as economies around the world are forced to improvise amidst the carnage of the Coronavirus crash.